Wells Fargo digs DLPG

A leading Wall Street equity analyst is urging investors to accumulate shares of Dorian LPG (DLPG).

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According to regulatory filings he and John Lycouris, the CEO of affiliate Dorian LPG (USA), have been involved in the management of shipping companies for more than three decades.


Michael Webber has followed the company ever since it completed a fundraiser in Oslo but formally initiated research coverage of its New York-listed shares on Monday.

In a note to clients the forecaster reiterated an “outperform” rating that reflects his faith in the US LPG carrier operator and the underlying fundamentals of the segment in general.

“Given its valuation (1.1x NAV, well below its peer group avg of 1.5x), position as the only US-listed long-haul player and continued M&A interest from Avance Gas we see a very attractive risk/reward profile for the stock,” he told investors.

Webber acknowledged that concerns surrounding Scorpio Tankers’ (STNG’s) plan to reduce its stake in Dorian LPG has served as a near-term overhang but said this has started to ease in the wake of a transaction that saw the tanker owner offload 3.4 million shares.

“STNG had been vocal about its intention to liquidate its holdings, with the potential pressure one of the few risks to our thesis,” the analyst explained, adding: “While STNG still owns approximately 17% the deal seems like a step in the right direction for Dorian.”

With a newbuilding backlog that includes 19 vessels scheduled for delivery between 2014 and 2016 Webber also pointed out that DLPG’s orderbook is larger than its three primary competitors in the long-haul LPG shipping sector.